Uber Technologies Inc on Thursday won a victory in its effort to keep unhappy customers from suing in court, persuading a federal appeals court to send a Connecticut passenger’s price-fixing case into arbitration. Overturning a lower court ruling, the 2nd U.S. Circuit Court of Appeals in Manhattan said Uber and former Chief Executive Officer Travis Kalanick provided the necessary “reasonably conspicuous” notice in online user agreements that disputes should be arbitrated.
“The Second Circuit’s powerful and commonsense opinion will serve to protect online contracting and strengthen commerce nationwide,” Theodore Boutrous, a lawyer for Uber, said in a statement. “We are thrilled with the decision.” Lawyers for the passenger, Spencer Meyer, and Kalanick did not immediately respond to requests for comment.
Thursday’s closely watched decision is a boost for internet companies hoping to enforce arbitration requirements, which are often buried in long lists of terms and conditions that customers may never see.
It also offers a lift to a besieged Uber, following a series of high-profile internal and legal problems. Kalanick resigned as CEO in June after a shareholder revolt, and is the subject of a lawsuit by Uber investor Benchmark Capital to force him off the company’s board.
Uber also faces allegations by female staff of sexual harassment and discrimination, a federal inquiry into software to help drivers avoid police, and a trade secrets lawsuit by Google parent Alphabet Inc’s self-driving car unit Waymo.
Meyer accused Uber and Kalanick of conspiring with drivers, whose earnings are shared with Uber, to charge “surge pricing” fares during peak demand periods.
He claimed he never saw a hyperlink to the Uber arbitration requirement when he used his smartphone to sign up.
Internet users often agree to such terms and conditions through “clickwrap” agreements by checking an “I agree” box, or “browsewrap” agreements where terms are posted via hyperlinks.
In July 2016, U.S. District Judge Jed Rakoff in Manhattan denied Uber’s request for arbitration, saying the San Francisco-based company never properly alerted Meyer to its policies.
Writing for the appeals court, Circuit Judge Denny Chin said typical smartphone users would find Uber’s disclosures clear, and Meyer was not excused for not following the hyperlink.
“While it may be the case that many users will not bother reading the additional terms, that is the choice the user makes,” Chin wrote. The appeals court returned the case to Rakoff to decide whether Uber waived its right to arbitrate by actively fighting Meyer in court. The case is Meyer v. Uber Technologies Inc, 2nd U.S. Circuit Court of Appeals, No. 16-2750.